Author Topic: New vs Old Cars  (Read 7193 times)

skp

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New vs Old Cars
« on: March 19, 2017, 06:03:53 PM »
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

mires

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Re: New vs Old Cars
« Reply #1 on: March 19, 2017, 06:10:53 PM »
Most people here aren't condoning 4 year old used cars but much older cars that are more like $5-6K cars that still have many years left in them. The savings becomes obvious then.

chemistk

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Re: New vs Old Cars
« Reply #2 on: March 19, 2017, 06:47:42 PM »
The most basic answer? Depreciation. Depending on the car, you can lose between 15%-25% of its value just by driving it off the lot.

You can also buy used cars off of Craigslist, avoiding the nightmare of a dealership and allowing you to pay the true value for a car or even get a deal on one.

If you're handy, know someone who is, or have a trusted mechanic, you can easily save money on maintenance.

You can get a great car for little money. Some cars suffer from an accelerated depreciation curve, meaning you get a lot of bang for your buck.

There are a litany of arguments for buying used. Buying new isn't a crime, and it makes sense in a number of situations, but frugality dictates you should find ways to live more efficiently and used cars are simply more efficient.

Notasoccermom

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Re: New vs Old Cars
« Reply #3 on: March 19, 2017, 06:48:25 PM »
First of all, the depreciation on a new vehicle is insane. Most vehicles should last you longer than 10 years. We just bought a 99 Camry and a 2005 pilot that run great.

Paul der Krake

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Re: New vs Old Cars
« Reply #4 on: March 19, 2017, 06:58:36 PM »
What happens if you replace 10 with 15?

tarheeldan

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Re: New vs Old Cars
« Reply #5 on: March 19, 2017, 07:39:05 PM »
According to Edmunds, cars typically lose 50% of their value in 4 years.

ETA: See also:
https://forum.mrmoneymustache.com/index.php?topic=13489.0

Dora the Homebody

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Re: New vs Old Cars
« Reply #6 on: March 19, 2017, 07:57:52 PM »
I'm a new-car buyer.

My last Corolla lasted 14 years and it still ran just fine... but it rusted out because (stupid) me didn't keep it rustproofed.  In the land of 6-month-winter the salt will really take a toll.

They also hold their value really well.  If you want one for less than $5000 you would be getting a 10 year old model at least.

aceyou

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Re: New vs Old Cars
« Reply #7 on: March 19, 2017, 08:40:50 PM »
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

I can explain why. 

- I buy 2007 Prius for 5000.  Drive it for 5 years, then sell it for 2500.  That's 500/year depreciation.
- Because the car is so cheap, I can easily justify PLPD insurance, which is 360/year.
- I spend 300/year on gas roughly. 
- Figure 500/year for maintenance, even though it's been averaging me less than that. 

Those four things add up to $1,660 per year, which is approximately the total cost of car ownership for me. 

Now let's take it a step further.  Because I only paid 5000 out of my 30,000 number that you threw out there, I have $25,000 sitting in VTSAX for 5 years that you don't.  I leave 25,000 earning 7% continuous interest for 5 years, and I end up with $35,477 when it's time to buy my next $5000 vehicle. 

I'm making more off the interest from my extra 25k than it costs me in total to own and operate the Prius.  That is what you are missing. 

If you just like owning a new car more than all the money you are losing, that's fine.  But if you think it's a wash financially, then no way.  People who buy used cars correctly are coming out tens of thousands of dollars ahead of you each decade from this one decision. 

Dora the Homebody

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Re: New vs Old Cars
« Reply #8 on: March 20, 2017, 06:19:57 AM »
Another factor: availability of used cars.  When you live in a smallish city your options are a lot more limited!  Especially in a very northern city where mostly everyone drives a truck/suv with 4 wheel drive to get through the snow in the winter.


beastykato

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Re: New vs Old Cars
« Reply #9 on: March 20, 2017, 07:43:02 AM »
Nothing wrong with buying a new car if you keep it.   Question is can you drive the same car for 15 to 20 years without wanting to blow your brains out?    I'm 6 years into mine.  I'll go at least 10 years with it, but I don't  know if I can drive the same thing until I'm 44. 

MayDay

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Re: New vs Old Cars
« Reply #10 on: March 20, 2017, 08:21:25 AM »
I got my 03 civic new.

I'm sooooooo sick of it. But it just won't die!

I'm curious how long it will last. Ultimately if you drive a car 15-20 years, then buying new isn't a huge deal. But almost no one keeps cars that long.
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StarBright

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Re: New vs Old Cars
« Reply #11 on: March 20, 2017, 08:25:41 AM »
I got my 03 civic new.

I'm sooooooo sick of it. But it just won't die!

I'm curious how long it will last. Ultimately if you drive a car 15-20 years, then buying new isn't a huge deal. But almost no one keeps cars that long.

I laughed at this because this morning I was driving my CR-V that I bought new in 2002 (my first car) and thinking - I hope this car never dies, I love it so much!

ketchup

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Re: New vs Old Cars
« Reply #12 on: March 20, 2017, 08:32:41 AM »
As long as you figure out cost per mile and per year properly, those are the figures to compare.

Depreciation is the main difference between new and used.

Assuming for example you get 250,000 out of your car (all hand-waved numbers):

A new car for $20,000 gets you $0.08/mile depreciation.
A 50k car for $12,000 gets you  $0.06/mile deprecation.
A 100k car for $5,000 gets you  $0.03/mile depreciation.
A 150k car for $1,000 gets you  $0.01/mile depreciation.

Buy as far down the curve as you're comfortable with. 

Maintenance cost per mile will average out pretty much the same on any similar car, repairs will be slightly more when you start hitting the 150k-200k range, but probably not as much on a per mile basis as one would think.  Gas cost will be basically the same as long as everything is running right.

Insurance is way fucking cheaper on an older car, especially if you're young or have a reason to be high-risk.

RWD

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Re: New vs Old Cars
« Reply #13 on: March 20, 2017, 08:51:58 AM »
If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Your math is wrong because it assumes your vehicles will be worth $0 when you get rid of them. As posted above, vehicles lose about 50% of their value every four years. So a vehicle that was $30k new would be $15k once it's four years old. I think this can be represented with the formula <used value> = <new value> * (0.5)^(age*0.25).

Let's compare:
$30k vehicle new would be worth ~$5,300 when 10 years old. $2,470/year in depreciation.
$15k used vehicle (bought when 4 years old) would also be worth ~$5,300 when 10 years old. This works out to $1,620/year in depreciation.

As you can see, that's $850/year in savings and we haven't even calculated the possible sales tax, higher registration fees/tax, and higher insurance. And the numbers only get better as you go older.

Let's say you buy that 10 year old vehicle $5,300. Then you sell in five years when it's 15 years old for $2,230 (again, using the same assumed rate of depreciation). That works out to about $615/year in depreciation.

Laserjet3051

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Re: New vs Old Cars
« Reply #14 on: March 20, 2017, 09:10:28 AM »
As the above responders  point out, the financial arguments for buying a used car are extremely compelling. I fully agree. However, what is not discussed are the associated increased RISKS with buying a used car. These risks can vary in a number of ways but must be factored into the final calculus. What a new (or nearly) car does is reduce those risks, sometimes bringing them down to ZERO. Some folks are willing to shell out the extra cash (a lot!) to reduce those risks.

Not me, however. I will buy the used but try to minimize risk buy having a qualified mechanic I trust go over the vehicle from bumper to bumper. I also do my research on car model longevity, average yearly maintenance, safety recalls, etc. This doesnt guarantee the used car I buy will pay off mathematically over the decade or longer I use it, but it does increase the probability that it will. Over the last 20 years, the 2 used vehicles I purchased did work out to be great investments. Luck? Maybe. New vehicle owners may just not want to roll those dice.

Tasty Pinecones

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Re: New vs Old Cars
« Reply #15 on: March 20, 2017, 09:29:10 AM »
I laughed at this because this morning I was driving my CR-V that I bought new in 2002 (my first car) and thinking - I hope this car never dies, I love it so much!

We feel the same way! ('99 5MT AWD EX getting a new engine soon). Right size/right configuration for our needs - still after 18 years.

PJC74

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Re: New vs Old Cars
« Reply #16 on: March 20, 2017, 09:45:08 AM »
Excise tax is a killer those first few years. Also insurance is more. Those two factors can tilt it out of favor for new over used.

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Paul der Krake

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Re: New vs Old Cars
« Reply #17 on: March 20, 2017, 01:14:44 PM »
As the above responders  point out, the financial arguments for buying a used car are extremely compelling. I fully agree. However, what is not discussed are the associated increased RISKS with buying a used car. These risks can vary in a number of ways but must be factored into the final calculus. What a new (or nearly) car does is reduce those risks, sometimes bringing them down to ZERO. Some folks are willing to shell out the extra cash (a lot!) to reduce those risks.

Not me, however. I will buy the used but try to minimize risk buy having a qualified mechanic I trust go over the vehicle from bumper to bumper. I also do my research on car model longevity, average yearly maintenance, safety recalls, etc. This doesnt guarantee the used car I buy will pay off mathematically over the decade or longer I use it, but it does increase the probability that it will. Over the last 20 years, the 2 used vehicles I purchased did work out to be great investments. Luck? Maybe. New vehicle owners may just not want to roll those dice.
You also have no idea how reliable a car is going to be when you buy it new, because there are no data points.

If I buy a 10 year old model, a couple minutes of research will reveal all the common pitfalls that new buyers have discovered for me. I can then take that into consideration.

ketchup

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Re: New vs Old Cars
« Reply #18 on: March 20, 2017, 01:39:50 PM »
You also have no idea how reliable a car is going to be when you buy it new, because there are no data points.
Related: https://en.wikipedia.org/wiki/Bathtub_curve  The only major (fundamental) problem my parents ever had with a car was one they bought new in 2003 (transmission issues at 50k miles, nearly unusable by 90k, sold for a song).  If they had been car shopping five years later for five year old cars, they would have known to avoid that model.

Mustache ride

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Re: New vs Old Cars
« Reply #19 on: March 20, 2017, 01:45:40 PM »
Aren't we forgetting that taking out extremely low interest loans, which is pretty normal on new cars, allows us more freedom to spend/invest elsewhere? I know it's not the same thing as paying off a mortgage since houses don't depreciate like cars, but it is definitely a "perk" i would say.

Wouldn't the same be true for leasing depending on the numbers? If you had enough money to buy a brand new car in cash, couldn't it potentially be better to instead invest that cash and lease the car. That way your investment gains are paying the monthly payments, and you get a new car every few years without worrying about repairs/maintenance?


ketchup

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Re: New vs Old Cars
« Reply #20 on: March 20, 2017, 01:54:58 PM »
Aren't we forgetting that taking out extremely low interest loans, which is pretty normal on new cars, allows us more freedom to spend/invest elsewhere? I know it's not the same thing as paying off a mortgage since houses don't depreciate like cars, but it is definitely a "perk" i would say.

Wouldn't the same be true for leasing depending on the numbers? If you had enough money to buy a brand new car in cash, couldn't it potentially be better to instead invest that cash and lease the car. That way your investment gains are paying the monthly payments, and you get a new car every few years without worrying about repairs/maintenance?
Whether to finance a car or not, and which car to get, are entirely different conversations.   No car I've ever bought is even eligible for a low-interest loan.  Also, a loan requiring full coverage collision insurance will probably negate any gains.

RWD

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Re: New vs Old Cars
« Reply #21 on: March 20, 2017, 02:15:34 PM »
Aren't we forgetting that taking out extremely low interest loans, which is pretty normal on new cars, allows us more freedom to spend/invest elsewhere? I know it's not the same thing as paying off a mortgage since houses don't depreciate like cars, but it is definitely a "perk" i would say.

Wouldn't the same be true for leasing depending on the numbers? If you had enough money to buy a brand new car in cash, couldn't it potentially be better to instead invest that cash and lease the car. That way your investment gains are paying the monthly payments, and you get a new car every few years without worrying about repairs/maintenance?

For someone that is spending $30k on a car anyway then it does make sense to finance it (assuming a low interest rate) and invest instead of paying outright. However, you can just as easily get a low interest loan for a used car. And once the car becomes cheap enough then getting a loan makes a negligible difference.

Here's a couple example scenarios where you have $30k to spend/invest:

Option 1: Buy new car for $30k, financed at 0.9% for 120 months (excellent terms for someone that wants to invest). Invest the $30k in the stock market, assuming 10% annual returns. Your monthly car payment of $261.51 is taken from your investment amount. After 10 years you sell the car for $5,303.30 (see my post above). Your investment account is now at $27,903.63. Add the car sale price and you now have $33,206.93. Wow, not only was the car free but you increased your starting money by $3,206.93!

Option 2: Buy a five year old car for $12,613.44 with cash. Invest the remaining $17,386.56. Sell the car after five years for $5,303.30. Buy another car for $14,622.44 (3% annual inflation) with the proceeds of your previous car's sale and from your investments. Sell that one after another five years for $6,147.98. Your investment account is now at $31,733.29 plus the $6,147.98 from the second car sale. You increased your starting money by $7,881.27! This is more than twice as much money without even resorting to financing leverage.

In both these scenarios you never own a car older than 10 years. You'll do even better with older/cheaper cars. And I didn't even try to calculate the increased insurance cost required with financing or the higher taxes that come with a new car.

thenextguy

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Re: New vs Old Cars
« Reply #22 on: March 20, 2017, 02:52:12 PM »
One thing that bothers me is having so much equity trapped in an depreciating asset. I'm going to be in the market for a "new" car soon and i'm starting to think I'd rather buy 1 used car every 6 years instead of one new car every 12 years.

WhiteTrashCash

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Re: New vs Old Cars
« Reply #23 on: March 20, 2017, 03:07:38 PM »
I bought my car new for cash, which probably wasn't the most Mustachian thing to do, but that gave me the advantage of controlling the car's maintenance from "birth". I have records for absolutely everything and I've never needed to do any repairs on this car in over six years of ownership (knock on wood), other than needing to replace one side mirror that was taken out by a neighbor. They paid for replacement, though, so that was no big deal.

Dora the Homebody

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Re: New vs Old Cars
« Reply #24 on: March 20, 2017, 03:27:17 PM »
When I bought new I sure wasn't going to take all that cash out of savings when I could finance it for 0.49%. 

inline five

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Re: New vs Old Cars
« Reply #25 on: March 20, 2017, 03:50:37 PM »
I'm 35 and still driving the first car I ever drove, the one I learned in. A 1995 Volvo w/ ~200k. Two years ago replaced the entire front and rear suspension and steering components. Four years ago replaced the transmission with a used one from a donor car I bought for $150. My parents donated it to me after college in 2003.

We've been looking at newer cars but I can't bring myself to get rid of this car. I've become addicted to the cheap ownership costs of it. Plus I know dang near every nut and bolt on the car, and the systems inside and out.

Spork

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Re: New vs Old Cars
« Reply #26 on: March 20, 2017, 03:58:36 PM »
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

What if I buy a $7000 car I drive for 10 years?  ;)
Or a $25 truck I drive for 10 years?  :)   <---  $25 is not a typo

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mm1970

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Re: New vs Old Cars
« Reply #27 on: March 20, 2017, 04:34:08 PM »
I'm a new-car buyer.

My last Corolla lasted 14 years and it still ran just fine... but it rusted out because (stupid) me didn't keep it rustproofed.  In the land of 6-month-winter the salt will really take a toll.

They also hold their value really well.  If you want one for less than $5000 you would be getting a 10 year old model at least.
8-9 year old Civics come up at about $5k

daschtick

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Re: New vs Old Cars
« Reply #28 on: March 20, 2017, 05:03:39 PM »
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

While I agree that long term ownership is the best way to make the most of your purchase, the cost of ownership is vastly improved by paying less for the initial purchase in the first place.

What is a 4 year old van really worth?  I guarantee that if you buy a new van for $30k, absolutely no one is going to give you $20k for it after 4 years.  That said, if you are paying $20k for a 4 year old van, you are paying way too much.  Private sale is maybe $15k, and if it was traded to a dealer, it would probably fetch only $12k.

Another factor you have not considered is what is the van worth after 10 years?  We can agree that a running van is still worth something, and if you take halfway decent care of your vehicles, you can probably get at least $5k for it on a private sale.  So for 10 years of use, you really have spent $25k ($2500/yr), while if you would have bought used for $15k, you would have only spent $10k $1667/yr) not including interest, additional insurance, and taxes.

One more issue that is not considered is what if you need to get out of the van due to a life event?  Let's you need to trade 2 years in.   The $30k van might fetch $20k after 2 years, but the $15k used van will probably fetch at least $10k.

That said, buying new, and keeping longterm is a good way to reduce your vehicle costs, however buying used in this same case is a far better choice.


GetItRight

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Re: New vs Old Cars
« Reply #29 on: March 20, 2017, 06:51:32 PM »
You're only looking at new cars. I only drive 30+ year old vehicles that are fairly desirable so there's no depreciation and the possibility of appreciation. I also don't change vehicle every few years, I get what I want with the intent to keep it indefinitely barring any significant change in my needs or circumstances. $3k-$5k gets you a very nice and outright luxurious vehicle, though if patient for the right deal you can spend as little as a grand and be money ahead right off the bat if you flipped it. Figure up to $500-$1000 to catch up on maintenance and fix previous owners hackjobs then maybe an average of a couple hundred a year in maintenance. Some years may be nothing more than oil changes, others you may have larger items but everything will be cheap, fast, and easy with a simple reliable older vehicle that will never leave you stranded needing a tow.

Be sure to consider insurance savings too. I'll self insure $10k or less against theft or other total loss with nobody to compensate me, $20k+ though is a tough pill to swallow and the insurance alone would easily cost another $1000/yr give or take depending on the vehicle. No way I could justify the cost to purchase, maintain, and insure a newer vehicle that's less reliable than my simple old stuff.

inline five

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Re: New vs Old Cars
« Reply #30 on: March 20, 2017, 07:24:05 PM »
I would personally at least drive a safe car with multiple air bag systems, ESC and anti lock brakes.. Mine has front and side impact bags but must admit I am considering updating to a newer model with more safety and newer engineered crash protection. Volvo, Mercedes, Audi/VW, Subaru etc are all heavy into safety features. In fact IIRC there hasn't been a single fatality in an XC90 for several years.

It's not my driving I'm so much concerned about it's others. Maybe a drunk driver, text answering teen, or mechanical failure on the highway that prompts the crash. Doesn't matter - we save our money so we want to be around to enjoy it. IMO.   

Here is a recent list with good starting points.

http://www.iihs.org/iihs/news/desktopnews/iihs-issues-recommendations-on-used-vehicles-for-teens-after-research-finds-many-arent-driving-the-safest-ones

It's the depreciation that gets you on buying newer cars. Buy a cheaper one that has taken most of the hits. Also I would suggest buying a simple tool set and looking at online fix it forums. Both Subaru and VW/Audi have a pretty good following for DIYers (good for VW, because you'll need it!). 

Cranky

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Re: New vs Old Cars
« Reply #31 on: March 21, 2017, 05:15:19 AM »
We buy new cars because we've had terrible luck with used cars - we've always been a one car family, and when that one car doesn't run it spreads a lot of inconvenience and expense around. I'm happy with spending a little more to get those quality, trouble free years, and I don't care if the car depreciates because I'm never selling it anyway.

If you live someplace with great public transit, or you love working on cars, your equation will be different.

sam

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Re: New vs Old Cars
« Reply #32 on: March 21, 2017, 05:23:41 AM »
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

I buy a car for 2.5k drive it for 4 years and sell it for 500-1k that's around 750 per year. The problem with financing for me is that it conditions you to think you can afford a much more expensive car so you end up spending say 10k rather than a 2-5k second hand car.

Sam
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BAMxi

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Re: New vs Old Cars
« Reply #33 on: March 21, 2017, 12:20:44 PM »
Example of what you're driving/have driven? I've always thought about taking this approach as well (bit of a car guy), maybe with an older porsche/Merc/BMW. Had a 3 series for over 6 years with no major problems, only sold it recently because I got $3k more than book value because of its condition and i was going months between driving it.

You're only looking at new cars. I only drive 30+ year old vehicles that are fairly desirable so there's no depreciation and the possibility of appreciation. I also don't change vehicle every few years, I get what I want with the intent to keep it indefinitely barring any significant change in my needs or circumstances. $3k-$5k gets you a very nice and outright luxurious vehicle, though if patient for the right deal you can spend as little as a grand and be money ahead right off the bat if you flipped it. Figure up to $500-$1000 to catch up on maintenance and fix previous owners hackjobs then maybe an average of a couple hundred a year in maintenance. Some years may be nothing more than oil changes, others you may have larger items but everything will be cheap, fast, and easy with a simple reliable older vehicle that will never leave you stranded needing a tow.

Be sure to consider insurance savings too. I'll self insure $10k or less against theft or other total loss with nobody to compensate me, $20k+ though is a tough pill to swallow and the insurance alone would easily cost another $1000/yr give or take depending on the vehicle. No way I could justify the cost to purchase, maintain, and insure a newer vehicle that's less reliable than my simple old stuff.

kellyincville

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Re: New vs Old Cars
« Reply #34 on: March 21, 2017, 12:56:50 PM »
You're only looking at new cars. I only drive 30+ year old vehicles that are fairly desirable so there's no depreciation and the possibility of appreciation. I also don't change vehicle every few years, I get what I want with the intent to keep it indefinitely barring any significant change in my needs or circumstances. $3k-$5k gets you a very nice and outright luxurious vehicle, though if patient for the right deal you can spend as little as a grand and be money ahead right off the bat if you flipped it. Figure up to $500-$1000 to catch up on maintenance and fix previous owners hackjobs then maybe an average of a couple hundred a year in maintenance. Some years may be nothing more than oil changes, others you may have larger items but everything will be cheap, fast, and easy with a simple reliable older vehicle that will never leave you stranded needing a tow.

Be sure to consider insurance savings too. I'll self insure $10k or less against theft or other total loss with nobody to compensate me, $20k+ though is a tough pill to swallow and the insurance alone would easily cost another $1000/yr give or take depending on the vehicle. No way I could justify the cost to purchase, maintain, and insure a newer vehicle that's less reliable than my simple old stuff.

Could you expand on this a little more? 

I've been thinking that for my next vehicle that I would like an older car that has nearly bottomed out its depreciation.  But I'm not a car person and I'm not sure where to start.  What car manufacturers do you recommend?  Any tips for how to spot a car that would be a good candidate?

Optimiser

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Re: New vs Old Cars
« Reply #35 on: March 21, 2017, 01:36:55 PM »
If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

I bought an 18 year old car for $2,500 cash. 9 years later I'm still driving it, and it's still worth $2,500 (probably more). That's $0 per year. Maintenance costs have been the same as a newer car, occasional belts, tires, brakes, and oil changes. I did replace the shocks which a newer car might not need, but it hasn't needed any needed repairs.

I've never owned a car that was newer than 10 years old. That's the expensive time to own them. Low mile old cars is where it's at. Japanese cars from the 90s and 2000s run forever.

alsoknownasDean

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Re: New vs Old Cars
« Reply #36 on: March 22, 2017, 12:49:09 AM »
Because the market value of cars reduces by 40-70% in the first five years of ownership. A car in a normal environment should be good for 15 years or longer.

It just makes sense to buy when the value of the car is lower compared to the remaining useful life. A car with 67% of the useful life selling for 40% of it's new price? Sounds good.

Not to mention the opportunity cost of the extra money spent. If I go and spend $30000 on a new car instead of $12000 on a second-hand car, that $18000 is no longer able to be invested. Any forgone future investment returns is an opportunity cost of buying the new car, and oftentimes that amount is greater than any additional maintenance requirements.

That's assuming that the disposal value of either car is zero at the end of its useful life. It doesn't take into account insurance or similar either.

The other advantage is if you buy a used car that's a few years old, any of the common problems that occur with the car (like with all cars) are usually already known.

There's also something freeing about owning a car that you don't give much of a fuck if it gets scratched, and can replace with cash on hand.
« Last Edit: March 22, 2017, 12:51:26 AM by alsoknownasDean »

jooniFLORisploo

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Re: New vs Old Cars
« Reply #37 on: March 22, 2017, 01:10:26 AM »
We buy new cars because we've had terrible luck with used cars - we've always been a one car family, and when that one car doesn't run it spreads a lot of inconvenience and expense around. I'm happy with spending a little more to get those quality, trouble free years...

+1.

After my first two experiences with used, and the shady folks doing "repairs" on them, I was done.

For me, there would be a cost (money, time, energy) of learning vehicle repair on top of everything I already do, and I factor that in to overall "expenses."

However, my kid shows a strong leaning toward the mechanical, and that's where he likes putting most of his energy. If/when he becomes a new resource in that area, our family math will look different. By then the car will be 12 years old and ready for his mechanical wisdom, his purchase from me, or a straight-up sale with no concern from me over the annual costs incurred in the meantime on this fantastic life tool. (I can see trading the car out IF we become homeless and need to move into an RV, but short of that no.)

GetItRight

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Re: New vs Old Cars
« Reply #38 on: March 23, 2017, 06:43:23 PM »
Example of what you're driving/have driven? I've always thought about taking this approach as well (bit of a car guy), maybe with an older porsche/Merc/BMW. Had a 3 series for over 6 years with no major problems, only sold it recently because I got $3k more than book value because of its condition and i was going months between driving it.

Could you expand on this a little more? 

I've been thinking that for my next vehicle that I would like an older car that has nearly bottomed out its depreciation.  But I'm not a car person and I'm not sure where to start.  What car manufacturers do you recommend?  Any tips for how to spot a car that would be a good candidate?

Most of my vehicles have been 60s Fords, compact or full size. I've had several 80s trucks, though 80-96 are all essentially the same. My current daily driver for my 3-4 miles commute is an 80s Ford pickup. If I had a long commute I'd be driving a 60s or maybe 70s car, but as it is my truck averages mid-high teens for MPG mostly around town. Fuel costs are irrelevant for me, a truck is justified for for practical reasons and required to do what I enjoy, and in the warmer months I mostly ride my nearly 50 year old motorcycle which gets 40-50 MPG, so no mustachian thumbing of noses.

To drive a 30-50 year old vehicle you need to have a little mechanical aptitude and a willingness to learn. You can't drop it at a shady mechanic any time there's a minor issue and pay $500+ for the luxury of not having to deal with replacing a $20 part that's 30+ years old. When you first buy a 30+ year old vehicle it'll need things that the previous owners have neglected or hacked together to keep it going. The first months are an adventure in getting caught up on maintenance unless you got a real gem. Once you've gone over all the basic wear items and typically neglected or hacked things these simple old vehicle are much more reliable than new vehicles. No complex electronics to fail, you'll never be stuck walking when your engine that's in perfect mechanical health quits because an $80 electrical sensor let the smoke out. I've only been left walking once in over a decade and it was the electronic ignition (notoriously reliable, stange) that failed. It ended up being a fun adventure of a day.

I like old Fords, I found them aesthetically appealing when I was young and learned them in and out but any other brand will all be more or less the same with minor differences. If I wanted a fun and cheap commuter car I'd be looking for a mid-late 60s Falcon or a 70s Maverick. A Falcon with a small six gets 30+ MPG highway, with an overdrive transmission and some tuning I believe 40 MPG is possible. Around town expect 20+ MPG. Some Mavericks came with overdrive transmissions (4 speed SROD) and already have the foundation to be efficient. I would also consider an 80s or early 90s fox body Mustang. They're cheap and came from the factory with a 302 and 5 speed overdrive transmission. Easy 30+ MPG fun car and they're cheap all day while a Falcon or Maverick may require patience to find the right car. Any of these should be possible for not more than a few grand, and under $1k if you're patient.

For foreign stuff, the only thing that comes to mind I might consider is 70s or 80s Mercedes or Volvo diesel but I know nothing about them other than they're very simple mechanically speaking. If you don't mind a starting a hobby filtering fuel, you can run them on vegetable oil, waste motor oil, or just about any oil.

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Re: New vs Old Cars
« Reply #39 on: March 23, 2017, 07:59:44 PM »
I'm wrestling with old vs. older right now.  Currently own an '07 Toyota FJ Cruiser, bought pre-mustacian, though I have driven it 10 years now.  Unfortunately New England weather has taken its tool on the undercarriage, even though the rest looks and runs great.  My dilemma is selling it now while it's worth ~$13,000 and buying something newer to give to my daughter in 4+ years, vs. keeping and putting money into timing belt, new tires, additional items failing with rust, etc..  I'm eying a '14 Camry with 60k mileage for just over the value of the FJ, which should last another 100,000 - 200,000 miles.

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Re: New vs Old Cars
« Reply #40 on: March 23, 2017, 08:08:13 PM »

BAMxi

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Re: New vs Old Cars
« Reply #41 on: March 23, 2017, 08:19:43 PM »

Most of my vehicles have been 60s Fords....

This is awesome. I love seeing old trucks being daily driven and used. It's pretty common in Missouri where I live, and certainly where i grew up (small town of about 700). I've tossed around the idea of getting a cool old truck in good shape. I like Fords too, though my knowledge of them quickly cuts off prior to late 80s/early 90s. My dad had an 89 (i think) thunderbird with the 5.0. He inherited it when my grandpa died in I think 2010, had 35k on it. That was a cool car, I used to borrow it sometimes. Didn't really feel all that fast and definitely didn't corner well, but it was a sweet highway car and quite comfortable. I grew up wrenching on old cars with my dad, but now I have a bit of a hookup with Fords, my wife's stepdad is a Ford Senior Master Tech. We drive two oldish Fords currently, a 2002 Taurus with 196k and a 2002 Explorer with 140k. Just picked up the Explorer around the time i sold my 3 series. We have a baby and needed to be able to haul her stuff around plus we do a lot of hiking and camping and legitimately use the space for hauling, so i justified it. plus my commute is a walking commute, so it mostly sits parked until it is needed. It's got a bit of a timing chain rattle, so we'll see if it destroys itself. I've got maybe $4k into it and am hoping to take it to 200k miles like the Taurus. Wife's stepdad seems to think we could throw a used or reman engine in there for a reasonable cost if it came to it.

Exflyboy

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Re: New vs Old Cars
« Reply #42 on: March 23, 2017, 09:26:04 PM »
Depends on the mdel but I have been seeing huge depreciations in the first year. Like 40% for a Dodge Charger and 37% on a Chrysler 300 I fancied.

My Wife's 2 year old Chevvy Cruze was $12k.. which if I recall was about 50% depreciation in 2 years.

So depreciation is definitely front end loaded. Add to that I have never taken a car to a mechanic and always pay cash.

Savings for us have been substantial.

Awka

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Re: New vs Old Cars
« Reply #43 on: March 24, 2017, 07:11:19 AM »
Consider life can throw curveballs.  In 2007, I bought a brand new Honda with my ex, planning to baby it + run it into the ground. We could easily afford it, no interest, and affordable payments.

Long story short: went from well off to losing everything, including the affordable new car, in a couple years.

The now 15 yo used car, I bought for under $3k more than 5 years ago? Mine. Paid for. Yes, it might not pass inspection this year. But if I figure it cost about $700/800 a year to own, insure, and repair? Good start.  If I have to replace it, I'm going pre 1995 Volvo (no emissions in my state if that yr or older), if  I can find one. Hopefully under a grand, decent body.

I'm not picky though. And I only drive abt 2,000 miles a year, so repairing my beater may also be an option if the numbers make sense.

For the once or twice a year I might truly need a newer car, I can always rent one.  Enterprise has a $9.99 a day weekend deal, as an example.


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Re: New vs Old Cars
« Reply #44 on: March 24, 2017, 07:33:23 AM »
I'm not being super picky about the model but I've just not seen the depreciation everyone is talking about. 
I would just fix my 10 year old Dodge Caravan.  It's pretty rusted, but that doesn't bother me.  (that's the problem w caravans they rust pretty early in their lives).  I actually prefer to drive older cars just because it's freeing not to care if it gets dinged.   My husband  is the one that wants to get rid of it.  1) He doesn't  work on cars.  His philosophy is that newer cars are difficult to work on because you need a computer and even if you could diagnose the problem the cost of all the equipment you'd  need to work on them is not worth the price.  And then also complains about the hassle of taking it to the mechanics.  2) He fels it's unsafe to drive an unrealiable car.  IMO any car can be unreliable.

Awka

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Re: New vs Old Cars
« Reply #45 on: March 24, 2017, 08:35:06 AM »
Does your husband drive the van too?

I guess it really comes down to what works best for your lifestyle, and how much of an issue new vs used is in your marriage. If you're saving $1-3k a year buying used, and fight about the "crappy old car" all the time? Probably not worth it, in the scheme of things. I'm not remarried, and no one else drives my ugly Chevy, so I can slap a piece of duct tape on a rust spot, and happily tool around town. If it dies, it dies.  I'm not out at 2am on deserted roads.  I have a car kit, a cellphone, etc. No biggie.

My new SUV? Was hit twice, neither my fault.  The second time a fire truck swiped it while it was parked, two days after I'd gotten it back after an uninsured, unlicensed idiot hit me.  In both cases, I was out the deductible. $$$.

Stuff happens with cars, new or used. For me, car payments are more stressful than older car quirks.  If I could pay cash for a new vehicle? I probably still wouldn't buy brand new again, but I can understand how it makes sense for others.

Exflyboy

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Re: New vs Old Cars
« Reply #46 on: March 24, 2017, 09:18:42 AM »
I'm not being super picky about the model but I've just not seen the depreciation everyone is talking about. 
I would just fix my 10 year old Dodge Caravan.  It's pretty rusted, but that doesn't bother me.  (that's the problem w caravans they rust pretty early in their lives).  I actually prefer to drive older cars just because it's freeing not to care if it gets dinged.   My husband  is the one that wants to get rid of it.  1) He doesn't  work on cars.  His philosophy is that newer cars are difficult to work on because you need a computer and even if you could diagnose the problem the cost of all the equipment you'd  need to work on them is not worth the price.  And then also complains about the hassle of taking it to the mechanics.  2) He fels it's unsafe to drive an unrealiable car.  IMO any car can be unreliable.

His philosophy in my experience is not correct, I have heard this "new cars can't be worked on" numerous times but in reality they are generally more reliable in the first place and therefore need much less fixing. Secondly there has never been a problem my $21 code reader could not figure out, I may well have been lucky with the problems I have had perhaps.

The fixing has always been with pretty much standard tools.

I have never been to a mechanic.. I don't trust them "we clear the code for $85 and then we go from there". That was the one and ONLY conversation I had with the stealership mechanic... :)

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Re: New vs Old Cars
« Reply #47 on: March 24, 2017, 09:43:50 AM »
Agree with the above. New cars have the same wear and maintenance items as old - things like brakes, spark plugs, filters, oil changes, etc, are all the same in a 2017 car as they were in a 1975 car.

I've worked on some older cars with carburetors, points ignition, and drum brakes, and I am quite happy not having to deal with any of those technologies anymore. Fuel injection and OBD-II, with a code scanner and Google, and I'm good.

Exflyboy

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Re: New vs Old Cars
« Reply #48 on: March 24, 2017, 10:19:47 AM »
Exactly, I often think its a fear of anything "computuerised", when in reality things either work or they don't. Plug in the code reader and it tells you where the problem is.. Sure it could be bad wiring going to a sensor but at least you are zoned into the problem.

I'll take that over hours of fiddling and adgusting... Plug in the sensors and the computuer figures it out.. Done!

Of course some people just don't want to work on cars.. Thats cool but the whole "you CAN't fix them" is pretty nonsensical IMHO.

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Re: New vs Old Cars
« Reply #49 on: March 24, 2017, 10:25:27 AM »
Exactly, I often think its a fear of anything "computuerised", when in reality things either work or they don't. Plug in the code reader and it tells you where the problem is.. Sure it could be bad wiring going to a sensor but at least you are zoned into the problem.

I'll take that over hours of fiddling and adgusting... Plug in the sensors and the computuer figures it out.. Done!

Of course some people just don't want to work on cars.. Thats cool but the whole "you CAN't fix them" is pretty nonsensical IMHO.
People could be thinking of scarier things like airbag systems etc.  Like if you bork up reconnecting the airbag system after removing a connection to get it out of the way, you can get an ABS light in the dash that costs $200 to turn off at the dealer.  I ran into the possibility of that happening (turns out I didn't bork it up despite my paranoia) on my '09 Hyundai when I swapped out the heater core last fall.

But even then, I'd probably rather have the airbags and have to pay $200 if I mess up than drive a 60s car without airbags.